Tenn. politicians threaten to kill VW incentives if UAW wins election

WASHINGTON -- Volkswagen AG has been soliciting subsidies from Tennessee and Mexico, hoping to pick a production site this year for a mid-sized SUV due to go on sale in 2016.

And it seems that this week's UAW election at the VW assembly plant in Chattanooga could tilt the competition in Mexico's favor.

The reason? Republican lawmakers in Tennessee might no longer want to double down on the $580 million in state and local incentives that they offered VW in 2008.

If the workers opt for UAW representation, VW would have a "very tough time" securing more incentives from the state legislature, Bo Watson, a state senator from suburban Chattanooga, said during a press conference this morning. He was flanked by House Majority Leader Gerald McCormick, a powerful figure in Tennessee politics, who said the "heavy hand" of the UAW is unwelcome in the state.

"The taxpayers of Tennessee reached out to Volkswagen and welcomed them to our state and our community," McCormick, a Republican from Chattanooga, said in an e-mail to Automotive News. "We are glad they are here. But that is not a green light to help force a union into the workplace. That was not part of the deal."

A spokesman for Tennessee Gov. Bill Haslam said in an e-mail to Automotive News that state lawmakers would play a big role in approving incentives for the VW plant because the project would be too large to approve with existing funding for the state's "FastTrack" incentive program.

"The governor has been clear about the impact of the UAW on the state's ability to recruit other companies to Tennessee," the Haslam spokesman said. "Any discussions of incentives are part of additional and continued talks with VW, which we look forward to."

Last-minute lobbying

UAW critics jumped on the lawmakers' claim to persuade workers to vote against union representation. A group called Southern Momentum quickly put out a statement that quoted Mike Burton, a paint-shop employee who leads a coalition of workers opposed to the union.

"This confirms exactly what we have been telling people," he was quoted as saying. "A vote for the UAW is a vote against the expansion of the plant, plain and simple."

Watson and McCormick were not just critical of the UAW. They were also critical of VW, saying that the company has given union supporters an unfair advantage by allowing them to enter the plant and speak with workers.

Volkswagen denies that charge. In a statement this weekend, the company said both UAW supporters and opponents are free to hand out leaflets and speak with their fellow employees about the union drive.

The statement also said VW could have recognized the UAW with a "card check," in which signed cards of support take the place of a secret-ballot election. The company insisted on an election, said Sebastian Patta, vice president of human resources, to reflect its belief that "democracy is an American ideal."

Patta added: "Outside political groups won't divert us from the work at hand: innovating, creating jobs, growing, and producing great automobiles."

Site decision coming soon

About 1,500 workers are eligible to vote in the UAW election, which will take place Wednesday to Friday under the supervision of the National Labor Relations Board.

It is unclear whether Tennessee politicians' subsidy threat would last beyond the election or whether the promise of a plant expansion, with the thousands of jobs it would bring, would outweigh their dislike of the UAW.

Volkswagen CEO Martin Winterkorn announced last month that VW will launch a mid-sized SUV in 2016, modeled after the CrossBlue concept that was unveiled at the Detroit auto show in 2012.

Michael Macht, the board member for production at VW, told Automotive News at the time that a decision on a production site would follow within six months. He said VW was still asking about incentives.

Corker vs. UAW

Some top lawmakers in Tennessee have refrained from commenting ahead of the UAW election, including Republican U.S. Sen. Bob Corker, who said last year that inviting the union into its plant would make VW the "laughingstock" of the industry.

Corker has often drawn the UAW's ire for his criticism of the union, particularly during the government bailout discussions for General Motors and Chrysler in 2009.

"During the next week and a half, while the decision is in the hands of the employees, I do not think it is appropriate for me to make additional public comment," Corker told news outlets last week.

That stance drew praise from the UAW.

"Other politicians," UAW Region 8 Director Gary Casteel said, "should follow the lead of Senator Corker and respect these workers' right to make up their own minds."

But Corker, the former mayor of Chattanooga, subsequently announced later Monday that he would hold a press conference Tuesday to weigh in on the UAW election.

"I am very disappointed the UAW is misusing my comments to try to stifle others from weighing in on an issue that is so important to our community," Corker said in a statement.

"While I had not planned to make additional public remarks in advance of this week's vote, after comments the UAW made this weekend, I feel strongly that it is important to return home and ensure my position is clear."

Then, in response to Corker, Casteel issued this statement later Monday:

"It's unfortunate that Bob Corker has been swayed by special interests from outside Tennessee to flip-flop on his position on what's best for Chattanooga's working families.

"While outside interests and other politicians have been trying to impact the results of this vote, which would give Volkswagen workers a voice to make VW stronger in safety, job security and efficiency, improving the quality of life for everyone in Chattanooga. We believe Corker was right in his original statement that this vote should be left to the workers."